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Southeast Asia

Jul 13, 2005

Vietnamese telco wants tariff cut

HANOI - The country's oldest and largest telecom company wants to cut mobile telephone service charges but its rivals are crying foul, listing various factors that they say will disadvantage them in the event.

The Vietnam Posts and Telecommunications Corporation (VNPT), which owns the two largest networks, MobiFone and VinaPhone, has sought government permission to reduce mobile service tariffs, reportedly to assuage customers annoyed by a recent dispute. Deputy director of VNPT's Pricing and Marketing Department, Bui Tien Duong, said mobile telephony was the most profitable service in the telecom sector and was ripe for tariff cuts, especially in the current competitive scenario.

"Cutting mobile phone charges helps encourage consumption and benefits customers," he said. He was confident the business would remain profitable despite tariff cuts if service providers invested in infrastructure such as central and circuit switchboards. However, two younger and smaller companies, the military-run Viettel and Korean-owned S-fone had a different take.

Truong Thi To Lan, acting manager of S-fone's Hanoi customer care department, said her company was forced to pay a huge amount to hire infrastructure from VNPT. As a result, S-fone would badly lose out if VNPT was allowed to cut charges, she said. Not only did VinaPhone and MobiFone not have to pay the exorbitant charges that S-fone did for hiring infrastructure but also, in fact, received them from others, she pointed out.

S-fone, which has not been allowed by the government to set up its own infrastructure, is already charging customers below cost, she said. Viettel's deputy general director Nguyen Manh Hung said start-up companies like his and S-fone would be hard hit if VNPT's charge-cut was approved since they were yet to recoup even initial investment.

Another of their complaints found support from an independent telecom expert, Nguyen Quang A, who said the Ministry of Post and Telematics should fairly and closely supervise call connections between different service providers. He warned that customers would suffer the most if smaller rivals were knocked out of the market. "If only some powerful monopolies survive, we will pay a high price once international telecom groups enter the market," he said.

Deputy Minister of Post and Telematics Tran Duc Lai said charge cuts should follow a road map and not be done arbitrarily. "Any tariff cut should benefit customers, the service provider and government at the same time," he said. Lai also said VNPT, a corporation run by his ministry, was unhappy when the go-ahead to cut charges was not forthcoming.

He confirmed the ministry was setting up a committee to quickly deal with problems raising among service providers. It would report fortnightly on the call connection situation among service providers, he said.

Meanwhile, Viettel mobile phone users continued to have connection problems when calling VinaPhone and MobiFone numbers, sources in the military-owned company said. Last week, a Viettel representative said his company was working with VNPT to sort out the residual problems. So far, VNPT has opened 22 E1 connection ports to allow more Viettel mobile phone users to access the VinaPhone and Mobifone networks. But Viettel said it needed at least 62.

The two were recently involved in a dispute over connections as the Ministry of Defence, which owns Viettel Mobile, accused VNPT of limiting calls to its mobile and landline subscribers made by Viettel customers. Regulations stipulate that VNPT, as the country's largest telephone services provider, must ensure communications connection between its network and those of start-up companies.

(Asia Pulse/VNA)

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